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By Marcus Hoy
Dec. 12—An employee laid off while on unpaid parental leave was not entitled to salary during her notice period, Denmark's Supreme Court ruled Nov. 26. The court found that the employer's failure to pay full salary during the legal notice period was not inconsistent with employee rights guaranteed by the European Union's Parental Leave Directive. The Supreme Court's ruling confirms a June 29, 2012, Eastern High Court ruling appealed to the higher court by the employee's trade union, the Danish Association of Professional Technicians.
The case concerned a pregnant employee who reached an agreement with her employer under which she would receive full salary for the first 14 weeks of parental leave following the birth of her child. The employer, which declared bankruptcy shortly afterwards, failed to pay the employee's salary for the final three weeks of the leave period, and she subsequently chose to resign. The Employers Guarantee Fund, a state body that acted on behalf of the bankrupt company, agreed to pay the employee the outstanding three weeks' salary but denied her the additional three month's salary that would normally be payable following a dismissal or a resignation in similar circumstances.
The union maintained that the decision to deny the employee three months' salaried notice ran contrary to the Parental Leave Directive, which outlaws any form of discrimination against employees related to their maternity or paternity leave.
According to the union, the right to receive salary during the notice period has been confirmed by the European Court of Justice in a number of rulings, including the Oct. 22, 2009, Meerts ruling (C-116/08), in which the ECJ found that a female Belgian employee laid off during a period of part-time parental leave was entitled to compensation for loss of earnings based on her normal full-time working hours. The union also noted that the Parental Leave Directive expressly forbids member states from enforcing rules that impede the incentive to take parental leave by reducing employee remuneration.
One of the principal goals of the notice period is to offer economic security to employees as they transition from one job to another, the union pointed out, and any deviation from this aim dilutes rights guaranteed by the Parental Leave Directive. The union contended that the Danish court had an obligation to interpret the Danish Salaried Employees Act (2005/68) in accordance with the intent of the directive and claimed that indirect gender discrimination had been a factor in the case.
The Employers Guarantee Fund countered that the intent of the Salaried Employees Act is solely to cover earnings during the statutory notice period and does not provide for any additional compensation or reimbursement at the employer's expense.
The Supreme Court agreed that the Salaried Employees Act only protects an employee's right to recoup lost revenue. A salaried employee who leaves a position during a period of unpaid parental leave, as the worker in question did, will not lose any income and is consequently entitled to no additional compensation. The absence of the right to salary or compensation does not imply that an employee is losing a right which he or she would otherwise have held, the court noted, as the employee would have been no worse off if she had not been on parental leave.
The court also refuted the employee's argument that unlawful gender discrimination had occurred, pointing out that the ECJ has repeatedly held that employees taking maternity and parental leave can be deemed special cases as their circumstances differ from those of employees in the workplace.
Yvonne Frederiksen, a lawyer and partner at the legal firm Norrbom Vinding, told Bloomberg BNA in a Dec. 3 statement that the Danish Supreme Court ruling did not contradict the ECJ's holding in Meerts. Frederiksen, who represented the Employees' Guarantee Fund in both the High Court and Supreme Court, added that the case could not be pursued further as both courts had denied the union leave to ask the ECJ for a preliminary ruling on the issue. Such action is permissible if a national court finds that the understanding of the relevant EU law is unclear.
The Danish case differed from Meerts in that the Belgian employee was dismissed without notice, Frederiksen said, and was therefore entitled to severance pay that was independent of the loss that she incurred. Under Danish law, the award would be calculated on the basis of theemployee's earnings had the employment not ended.
“In a similar situation, a Danish employee would be entitled to compensation, which would be based on the salary that she would have received during the notice period,” Frederiksen said.
“The Belgian employee was entitled to an award that was calculated based on her salary at the time of termination,” Frederiksen continued. “In that calculation, it was taken into account that she was about to end her leave period and return to full salaried employment. Such a situation would also have been taken into account in Danish law because the award is calculated on the basis of what the employee would have earned if she were still employed.”
As the courts declined to refer the case to the ECJ, the union has announced its intention to lobby the Danish parliament for a change to domestic legislation.
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The Supreme Court ruling is available at http://www.hoejesteret.dk/hoejesteret/nyheder/Afgorelser/Documents/248-2012.pdf, a Nov. 26 statement from the Danish Association of Professional Technicians at https://tl.dk/om-os/aktuelt/pressemeddelelser/2014/november/foraeldre-paa-orlov-skal-beskyttes-bedre/, a Nov. 28 statement from Norrbom Vinding at http://www.norrbomvinding.com/da/nyhed/28112014/lon-under-foraeldreorlov-ny-dom-fra-hojesteret, all in Danish.
For more information on Danish HR law and regulation, see the Denmark primer.
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